Billionaire investor Stanley Druckenmiller said Tuesday that reckless government spending enabled by the Federal Reserve is harming average Americans and jeopardizing President Joe Biden’s re-election chances. He said he was exposing himself.
The head of the Duquesne family office, who made a name for himself betting on the British pound in the early 1990s, criticized fiscal and monetary authorities, including Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell.
He also called Bidenomics a failure and said consumers were paying the price in higher inflation.
“There seems to be a lot more awareness about the fiscal situation we’re in. Everybody seems to understand, and Yellen just keeps spending,” Druckenmiller said. “I think it’s politically stupid because it’s causing inflation and it doesn’t take a genius to understand that the average American is being harmed by inflation.”
Mr. Druckenmiller’s comments come as the Fed still seeks to reduce inflation as policymakers dash investors’ hopes for aggressive interest rate cuts this year.
He said it was a mistake to send markets into a frenzy for rate cuts, which had “exacerbated” financial conditions.
“It seemed to me that the Fed was in a perfect position. Inflation was falling and monetary conditions were tightening,” he said. “To some degree, I feel like they had a fumble at the 5-yard line.”
Fed’s mistake
Druckenmiller said his company was a “huge beneficiary” of soaring asset prices and easing conditions, but said the Fed’s shift in policy in late 2023 to strengthen the view that a rate cut was coming was a mistake. Still thinking. At that time, the Fed had only raised its unofficial forecast to two to three rate cuts. But investors interpreted Powell’s comments in December to mean that significant policy easing was on the horizon.
Elected officials generally welcome lower interest rates. Druckenmiller said Powell did Biden no favors.
Biden is in a close race against former President Donald Trump in the November election.
“Bidenomics, if I were a professor, I would give him an ‘F’,” Druckenmiller said. “Basically, they misdiagnosed the coronavirus and thought, “This is what they did.” [the economy] I was falling into a state of depression. She was the same with the Feds. ”
“The Treasury is still acting like we’re in a recession,” he added. “They’ve spent, spent, spent, and now my new concern is that the spending and the resulting interest rates on the debt are reducing the amount of innovation that would otherwise have occurred. I’m afraid the club will be shut out.”
The outbreak of the pandemic occurred under the Trump administration, which signed a $2.3 trillion coronavirus relief package in 2020. Biden later signed nearly $2 trillion more in relief in 2021.
Druckenmiller also didn’t have much good to say about Trump, saying inflation is likely to continue under his presidency.
During his time in office, Trump was a fierce critic of the Federal Reserve and repeatedly lobbied Powell and others to lower interest rates. Furthermore, President Trump has advocated heavy tariffs and has indicated that he intends to reimpose them if he wins in November.
“With Biden, I’m more concerned about stagflation, all the government spending, all the tricks Yellen has been using to manipulate the yield curve, and the way the Fed seems to be reigniting financial conditions.” “I think there could be some inflationary consequences,” Druckenmiller said. “But I’m also afraid of regulations and all the other things that hinder productivity.”
“So I’m basically a no-candidate guy,” he added. “I’m an old-school Reagan, pro-free market, pro-immigration, anti-tariff Republican.”
